Female nurse meets with elderly woman in home at bedside

Transition to the PDGM

In our Patient-Driven Groupings Model (PDGM) Flash Insights Report 2020, we wanted to see how well providers and their supporting vendors were able to transition into Medicare’s new payment models for home health agencies.

In terms of the vendors, the transition was fairly smooth. As to be expected, there were a few notable gaps and bumps with the rollout of the new technology to support organizations as they changed to the PDGM model. But the overall sentiment was that vendors were able to support their providers well.

Unfortunately, we were a little disheartened to hear that the transition was pretty negative for many home health agencies. It looks like those agencies will be reimbursed less for what they are doing than they were previously. The following chart breaks down how organizations viewed the financial impact from these changes.
financial impact by organization size
(Note that none of the organizations reported a “very positive” impact.)

Value-Based Care

Medicare’s motivation behind changing their payment model is centered around market efficiency. This new grouping model actually makes provider organizations focus more on what the patient needs and less on how many people they are able to get through their doors.

In a way, the PDGM forces providers to think about how they're treating patients and to ensure that they're giving the highest quality of care right away. Organizations can easily but unintentionally fall into the habit of spreading out visits and care to optimize their own revenue collection. But now, organizations have to cut back on appointments that might not be as necessary and focus on giving more care to the people that need it.

Uncertainty in Organizations

The transition to the PDGM has affected all organizations differently. Many organizations are still unsure of what the effects actually are. A big part of the uncertainty comes from the COVID-19 pandemic, which has affected all of healthcare over the past couple of months. With the ever-changing new normal, it’s hard to attribute what changes are caused by any single factor.

But from our data, we have been able to see a difference in how the PDGM has affected larger versus smaller organizations. Larger organizations seem to have fewer issues with getting their technology where it needs to be. They may be only barely better off than smaller organizations, but the truth is that they simply have more manpower that they can devote to making changes.

Smaller organizations on the other hand have reported more negative financial impact. Our theory is that they have a smaller mix of patients, so there's less they can do to diversify. So, if they have a good patient mix for this new PDGM, they will be well off. But if they haven’t done as well, then they may not necessarily have other people that they can pull in. Some smaller organizations are unsure of whether they will be able to stay afloat or whether they will have to get bought out by a bigger organization just to survive.

Transition Checklist

The best thing an organization can do to ensure a smooth transition into the PDGM is to have someone devoted to watching the revenue cycle and working with the vendor to make sure everything—along with the technology—is functioning properly.

For those organizations still finding their way through this time of transition, here is a checklist of best practices:

  • Make sure coding is done accurately and submitted correctly.
  • Make sure all of your staff members are trained on the new payment model.
  • Watch for what gets denied so that you can fix it.
  • Have someone watching your revenue cycle.

More to Come

We still have a long road ahead of us to determine the effects of the PDGM on home health agencies. When we reached out to organizations around March to gather data, they had been using the new model for only two months. Providers have said that they would need at least three to six more months with a couple of quarters under their belts before they can have a better idea of the long-term financial impact the PDGM will have on their revenue cycles.

As we follow up with these organizations and continue to collect data, we plan to publish more home health performance data on vendors by the end of 2020. You can read more about the data we’ve gathered so far by reading the full report. Stay tuned. As always, there is more to come.


     Photo Credit: Adobe Stock, Africa Studio